The Third Party – Mortgage Debtor in Enforcement Proceedings

Under the provision of Article 429, paragraph 3 of the Civil Procedure Code (CPC), the writ of execution issued against the debtor also has effect against a third party that has secured the claim with a mortgage. The creditor (the claimant in the enforcement case) does not have a claim against the mortgage debtor, but only the right to satisfy his claim from the mortgaged property.

Therefore, the bailiff (public or private) is obliged to serve copies of the enforcement order on the debtors, but not on the third party – the mortgage debtor. In such a case, the so-called “mortgage debtor” becomes a party to the enforcement proceedings only after the enforcement has been directed against the mortgaged property, which secures another person’s obligation.

However, the third party is not a party to the previous order-for-payment proceedings initiated only against the debtors under the secured obligation.

According to Articles 419(1) and 423 of the CPC, only the debtor under the claim is entitled to appeal the order for immediate execution and to file an objection against the payment order – not the mortgage debtor (see Ruling No. 456/08.10.2015 of the Supreme Court of Cassation (SCC) on civil case No. 3947/2015).

According to the established case law (Ruling No. 603/04.07.2012 on commercial case No. 168/2012 of the SCC, and Ruling No. 531/25.09.2012 on commercial case No. 498/2012 of the SCC), a third party that has mortgaged its property to secure another’s debt (the so-called “mortgage debtor”) may be a party – debtor – in order-for-payment proceedings in the hypothesis of submitting an application and issuing a payment order under Article 417, item 6 of the CPC, in conjunction with Article 173, paragraph 3 of the Obligations and Contracts Act (OCA), in which case the mortgage debtor will have the right to file a private appeal under Article 419 CPC against the issued order for immediate execution.

If you have questions or need legal consultation related to enforcement proceedings, it is best to contact an experienced lawyer specializing in enforcement law.